How To Get Back Money You Lend Someone In India
Synopsis
Lending coin without paperwork is fine, if the corporeality is low. But if the sum is high, it is best to adhere to the rules that banks follow.
He had a practiced reputation, hailed from a respectable family and had known them for decades. So Sunder Bajpayi didn't think twice before lending his friend Rs xx lakh.
However, his sudden death changed everything for this Mumbai-based retiree. Autonomously from the emotional shock of losing a friend, Bajpayi's retirement savings turned into a bad loan. If a borrower dies before paying off his loan, the lender has the correct to recover his dues from the assets left behind past the deceased. Only this was a friendly loan and Bajpayi has no documentary bear witness of the transaction, except for the entries in his banking company business relationship statement. "A few months after his death, I tried getting in affect with his son who works for an MNC," says Bajpayi.
The son initially agreed to see him but eventually did not turn up at the meeting. "After that, he even stopped taking my calls," rues the retired broker. There are many similar Bajpayi. Lending money without paperwork is fine, if the amount is depression. Merely if the sum runs into 6 or seven figures, it is best to adhere to the rules that banks follow when lending out to customers.
No legal obligation to repay
"In such cases, the commutation of money is commonly based on mutual trust. The heirs of the deceased simply have a moral obligation to repay the loan. Yet, if any such loan is accompanied by a legal document, so the repayment liability will depend on the required clause mentioned in the certificate," says Pooja Dutta, Managing Partner at Mumbai-based law house Astute Police.
Fifty-fifty if the paperwork has been done, the legal heirs of the deceased person cannot be forced to repay all his loans. The liability of the legal heirs is limited. Rahul Ajatshatru, advocate at Bombay High Court says information technology is difficult to contest such cases without proper documentation. "Legal heirs are only responsible to the extent of the assets they inherit from the deceased person. If the outstanding loan amount is bigger than the value of the estate, it can be termed a bad loan and nothing else," he says. For instance, if the heirs have inherited avails worth Rs 10 lakh and the loan was for Rs 15 lakh, the legal heirs will accept to repay just up to Rs ten lakh, and the lender volition have to suffer a loss of Rs v lakh.
Requite a joint loan
A good way to resolve this is by giving a joint loan. That'southward what finance companies do when they requite home loans to ageing owners of residential property or pedagogy loans for college instruction. The children of the borrower are made co-borrowers in the loan. If the older person dies or is unable to service the loan, the younger person is required to fulfil the obligation. Mention the amount in the document and spell out the repayment obligations in an unambiguous language. Your friend or relative might not appreciate if you lot insist on the legal paperwork, and so you will need to be very tactful. Ultimately, equally Bajpayi'southward experience shows, it is better to be safe than lamentable.
Debt and death (Source: Astute Law and India Kanoon)
The repayment liability differs in different situations
Mortgage loans: If the deceased person has an outstanding home loan, banks can sale the property to recover dues and return the backlog amount to legal heirs.
Unsecured loans: For personal loans and credit card debt, the banking concern has the correct to claim all outstanding amounts from legal heirs of the deceased.
Informal borrowings: Money borrowed from family and friends, unless accompanied by a legal document has no legal repayment obligation.
Personal revenue enhancement: Personal income tax liabilities are waived if the taxpayer dies. Legal heir files return on his /her behalf for the entire twelvemonth.
(By Meghna Maiti)
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Source: https://economictimes.indiatimes.com/wealth/borrow/rules-to-follow-when-lending-to-friends-associates/articleshow/54496034.cms
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